Question 1

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

Accepted Answer

The auditor is responsible for evaluating whether the financial statements are consistent with the applicable financial reporting framework, which includes determining whether the accounting policies selected are consistent with the framework (B) and whether the information presented in the financial statements is relevant, reliable, comparable, and understandable (D). Choices A, C, and E may be relevant to the audit, but they do not explicitly relate to evaluating the consistency of the financial statements with the reporting framework. Thus, the correct answer is G, as it includes the two choices that are directly related to the evaluation of consistency with the reporting framework.

Question 2

The auditor has general audit responsibilities when he issues an audit report on financial statements prepared in accordance with a financial reporting framework that is generally accepted in another country.

Accepted Answer

False

Question 3

Management is responsible for

Accepted Answer

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the applicable financial reporting framework. Option A is incorrect because while accuracy and reliability are important, they are not the sole responsibility of management. Option B is incorrect because existence and completeness are typically the responsibility of the auditor. Option C is incorrect because valuation and relevancy may be subject to various assessments and interpretations, whereas the preparation and fair presentation are more objective and within management's control.

Question 4

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

Accepted Answer

The auditor evaluates whether the financial statements are consistent with the applicable financial reporting framework by ensuring that disclosures are adequate (A) and that the terminology used is appropriate (D). These aspects are directly related to the presentation and disclosure requirements of financial reporting frameworks.

Question 5

Two standards issued by the PCAOB (Auditing Standard No.4 and Auditing Standard No.5)provide guidance related to financial reporting.These standards apply to both public and private companies.

Accepted Answer

Auditing Standard No. 4 and Auditing Standard No. 5 issued by the PCAOB (Public Company Accounting Oversight Board) primarily apply to public companies, as the PCAOB oversees the audits of public entities to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.

Question 6

There are four modifications the auditor can make to the opinion in the independent auditor's report.The auditor can modify the opinion by issuing: (1)a qualified opinion; (2)an adverse opinion; (3)a disclaimer of opinion;or (4)a subject to opinion.

Accepted Answer

The correct modifications are: (1) a qualified opinion, (2) an adverse opinion, (3) a disclaimer of opinion. "Subject to opinion" is not a recognized modification in audit reporting standards.

Question 7

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework and must also consider

Accepted Answer

The auditor must consider both the overall presentation, structure, and content of the financial statements (choice A) and whether the financial statements represent the underlying transactions in a manner that achieves fair presentation (choice D). The other choices (B, C, E, and G) are not correct because the auditor does not evaluate whether management's accounting policies or estimates are accurate or predictable, nor does the auditor assess the accuracy of financial forecasts made by management.

Question 8

The auditing standards require the auditor to express an opinion on the financial statements in accordance with the auditor's findings.

Accepted Answer

The answer of The auditing standards require the auditor to...

Question 9

At the end of the audit,the auditor forms an opinion about whether the financial statements as a whole are prepared,in all material respects,in accordance with the applicable financial reporting framework.

Accepted Answer

At the end of an audit, the auditor does indeed form an opinion about whether the financial statements are prepared in accordance with the applicable financial reporting framework. This is a key component of the audit process.

Question 10

The audit opinion is addressed to

Accepted Answer

The audit opinion is addressed to the board of directors and the shareholders because they are the ones who are responsible for the financial statements of the company. The audit provides an independent and objective opinion on the fairness of the financial statements and the adequacy of internal controls over financial reporting. The SEC and PCAOB also have an interest in the audit opinion but the primary audience is the board of directors and shareholders.

Question 11

The standard unqualified audit opinion contains four sections

Accepted Answer

The standard unqualified audit opinion typically includes an introductory section, a section describing management's responsibilities, a section describing the auditor's responsibilities, and an opinion paragraph. These sections collectively provide a comprehensive overview of the audit process and its findings.

Question 12

If the auditor expects to include an emphasis of matter or other matter paragraph in the auditor's report,the auditor should communicate with those responsible for governance regarding this expectation and the proposed wording of the paragraph.

Accepted Answer

According to the International Standard on Auditing (ISA) 706, "Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report," the auditor should communicate with those responsible for governance if the auditor expects to include an emphasis of matter or other matter paragraph in the auditor's report. The auditor should also discuss the proposed wording of the paragraph and obtain their agreement in writing.

Question 13

In which paragraph do the words "present fairly,in all material respects," appear?

Accepted Answer

The phrase "present fairly, in all material respects" is typically used in the auditor's opinion paragraph, which provides the auditor's conclusion on whether the financial statements are presented fairly and in accordance with the applicable financial reporting framework.

Question 14

The third section of the audit report describes the auditor's responsibilities.This section states that the auditor is responsible for

Accepted Answer

The auditor's main responsibility is to express an opinion on the financial statements. While the auditor may perform other procedures such as testing internal controls and inquiring with management and legal counsel, the primary objective of the audit is to provide assurance on the accuracy and completeness of the financial statements. Choices A and B may be part of the auditor's procedures, but these are not the primary responsibilities stated in this section. Choice D is a specific procedure that may be performed as part of the audit, but it is not the auditor's overall responsibility.

Question 15

If management annual report on internal controls is incomplete or improperly presented,the auditor should modify his report to include an explanatory paragraph describing his reasons for the determination that the report is incomplete or improperly presented.

Accepted Answer

This statement is correct. According to auditing standards, if the management annual report on internal controls is incomplete or improperly presented, the auditor should modify their report to include an explanatory paragraph detailing the reasons for the determination that the report is incomplete or improperly presented.

Question 16

Management's responsibilities include

Accepted Answer

Management is responsible for the design and implementation of internal controls relevant to the preparation of financial statements that are free of material misstatement.

Question 17

The auditor should express an unmodified opinion when the auditor concludes that the financial statements are prepared,in all material respects,in accordance with the applicable financial reporting framework.The auditor should modify his opinion if the auditor concludes that

Accepted Answer

An unmodified opinion is expressed when the financial statements are free from material misstatements, in all material respects, in accordance with the applicable financial reporting framework. If the auditor concludes that there are material misstatements or is unable to obtain sufficient appropriate evidence to conclude that the financial statements are free from material misstatement, then a modification to the opinion is necessary. Therefore, options A and E are correct, and F is the best choice that includes both options. Options B and C are incorrect because the attorney letter is not used to assess the financial statements' accuracy. Option D is incorrect because it implies the inability to perform an audit, which is unlikely to happen in most cases.

Question 18

Which of the following is not a reporting standard?

Accepted Answer

C) Reissuance and/or Dual dating the Opinion in the Independent Auditor's report is not recognized as a standalone reporting standard. It is a practice or procedure related to the dating of the auditor's report, rather than a formal reporting standard like the others listed, which are part of the ISA (International Standards on Auditing) or similar standards.

Question 19

When an audit report is issued for a group audit,the group engagement partner must decide whether to assume the responsibility for the work of the component auditors or whether to refer to their work in the audit report.

Accepted Answer

The group engagement partner must decide whether to assume the responsibility for the work of the component auditors or refer to their work in the audit report as per the requirements of the auditing standards.

Question 20

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

Accepted Answer

The auditor is responsible for evaluating whether the financial statements are consistent with the requirements of the applicable financial reporting framework, including the adequacy of significant accounting policies disclosure (choice A) and the reasonableness of accounting estimates made by management (choice C).

Quiz 13: Audit Reports

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

The auditor has general audit responsibilities when he issues an audit report on financial statements prepared in accordance with a financial reporting framework that is generally accepted in another country.

Management is responsible for

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

Two standards issued by the PCAOB (Auditing Standard No.4 and Auditing Standard No.5)provide guidance related to financial reporting.These standards apply to both public and private companies.

There are four modifications the auditor can make to the opinion in the independent auditor's report.The auditor can modify the opinion by issuing: (1)a qualified opinion; (2)an adverse opinion; (3)a disclaimer of opinion;or (4)a subject to opinion.

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework and must also consider

The auditing standards require the auditor to express an opinion on the financial statements in accordance with the auditor's findings.

At the end of the audit,the auditor forms an opinion about whether the financial statements as a whole are prepared,in all material respects,in accordance with the applicable financial reporting framework.

The audit opinion is addressed to

The standard unqualified audit opinion contains four sections

If the auditor expects to include an emphasis of matter or other matter paragraph in the auditor's report,the auditor should communicate with those responsible for governance regarding this expectation and the proposed wording of the paragraph.

In which paragraph do the words "present fairly,in all material respects," appear?

The third section of the audit report describes the auditor's responsibilities.This section states that the auditor is responsible for

If management annual report on internal controls is incomplete or improperly presented,the auditor should modify his report to include an explanatory paragraph describing his reasons for the determination that the report is incomplete or improperly presented.

Management's responsibilities include

The auditor should express an unmodified opinion when the auditor concludes that the financial statements are prepared,in all material respects,in accordance with the applicable financial reporting framework.The auditor should modify his opinion if the auditor concludes that

Which of the following is not a reporting standard?

When an audit report is issued for a group audit,the group engagement partner must decide whether to assume the responsibility for the work of the component auditors or whether to refer to their work in the audit report.

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?